Giving friends money for gas is the default offer in college. The logic goes something like this: "Most of the costs to drive other than gas are either negligible or fixed, so paying for gas is close to fair." Yet, the cost of gas works out to around 15 cents per mile while the government estimate of the cost of driving is 57.5 cents per mile. The quote from the IRS website is that these costs include "the fixed and variable costs of operating an automobile, including depreciation, insurance, repairs, tires, maintenance, gas and oil." The IRS also says that moving or medical miles have a rate of 23 cents per mile to cover strictly the "variable costs such as gas and oil."
Based on the law, that suggests paying friends 23 cents per mile if they are making a special trip for you. However, an issue arises when you actually look at the list of "fixed costs." Clearly repairs due to normal wear and tear, depreciation, tires, and maintenance all are highly dependent on the actual number of miles driven. The only thing on the explicit list that is strictly a fixed cost is insurance. But, what is insurance actually for? Insurance covers (hopefully most) costs in the event of an accident. While registration costs are truly fixed since you either keep your car legally registered or not, insurance costs are an attempt to reduce risk.
It may be possible to separate the truly variable costs from the truly fixed and get a more accurate rate to pay friends. But I would argue that the government rate is a much better approximation of the variable cost of driving than simply paying for gas.
Based on the law, that suggests paying friends 23 cents per mile if they are making a special trip for you. However, an issue arises when you actually look at the list of "fixed costs." Clearly repairs due to normal wear and tear, depreciation, tires, and maintenance all are highly dependent on the actual number of miles driven. The only thing on the explicit list that is strictly a fixed cost is insurance. But, what is insurance actually for? Insurance covers (hopefully most) costs in the event of an accident. While registration costs are truly fixed since you either keep your car legally registered or not, insurance costs are an attempt to reduce risk.
It may be possible to separate the truly variable costs from the truly fixed and get a more accurate rate to pay friends. But I would argue that the government rate is a much better approximation of the variable cost of driving than simply paying for gas.
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